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New Jersey Employment Lawyers > Blog > Employment Law > Does Severance Pay Impact Unemployment Benefits in New Jersey?

Does Severance Pay Impact Unemployment Benefits in New Jersey?


Leaving a job can be a challenge. Whether you are leaving voluntarily or involuntarily, a severance package can help to smooth your transition. You may be wondering: How does severance pay impact my right to file for unemployment benefits? Unlike in most other states, it generally does not affect your rights in New Jersey. With limited exceptions, the state does not count severance as income. In this article, our Monmouth County severance agreement lawyers explain the key things to know about how severance benefits impact unemployment benefits in New Jersey.

New Jersey Does Not Treat Severance Pay as Income (No Adverse Impact on Unemployment)

In the majority of U.S. states, severance pay will have some impact on a worker’s ability to apply for and obtain unemployment benefits. However, that is largely not the case in New Jersey. You can get unemployment benefits even if you are also getting a severance package. The state does not treat your severance pay as income for the purposes of unemployment—at least in most cases. As explained by the New Jersey Department of Labor and Workforce Development, “you should file your claim immediately after you stop working full-time, even if you are getting severance pay.” It is a policy that can be quite beneficial for workers who are making a transition.

 The Exception: Salary Continuation

 The notable exception in New Jersey’s treatment of severance pay is salary continuation. When an employer opts for salary continuation, it essentially means the employee continues to receive their regular paycheck for a specified period after termination. It is an arrangement that is treated differently from a lump sum severance payment for the purposes of unemployment benefits. If you want to protect your right to file for unemployment as soon as possible after leaving a job in New Jersey, make sure that your severance package is structured properly. A lawyer can help

You Have the Right to Negotiate for a Better Severance Package 

Employers are not legally required to offer severance pay in New Jersey. The amount of your severance package will depend on a number of different case-specific factors. It is important to remember that you have the right to negotiate for a better severance package. Indeed, a strong negotiation is crucial—you may be in a position to get a significantly better severance agreement.  Employees should consider their tenure, role, and circumstances of their departure when negotiating for severance. Do not go it alone: A New Jersey employment lawyer with experience handling severance negotiations can protect your rights and your interests.

Speak to Our New Jersey Employment Lawyer Today

At Poulos LoPiccolo PC, our New Jersey employment law attorneys have deep experience handling severance negotiations. If you have any questions about severance pay and unemployment, we can help. Contact us right away to set up your fully private no obligation case review. With a legal office in Monmouth County, we assist employers with severance pay cases throughout New Jersey.



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